Andrew Mastorakis was appointed president of Fremont Bank September 14, 2009. Mastorakis came to Fremont Bank from OneWest Bank. His prior experience includes an executive position at Tri Counties Bank in Northern California and various assignments at Wells Fargo Bank in San Jose. Mr. Mastorakis spoke with TCV about the current economic environment and how banking, especially community banking, has been affected.

TCV: How does Fremont Bank fit in banking model of today?

Mastorakis: My 20 plus years of experience with large banks, community banks and mortgage banks has given me a strong conviction that supports the community bank model. Fremont Bank is focused on the community it serves but large enough to be a material partner in the East Bay and the Bay Area in general. The unique heritage of our bank extends from its founding and growth as a single entity. It is likely that customers with Fremont Bank will be banking with the same bank five or ten years in the future.

TCV: What is the business model of Fremont Bank?

Mastorakis: Our expansion is focused primarily on the contiguous East Bay. We are seeking an increased physical presence balanced with technology. Unlike many other community banks, we have a broad business model. While some smaller, community banks focus on deposit-based services to the general community and commercial lending needs, Fremont Bank has avoided the problems of overextension in commercial real estate loans. Our portfolio of residential real estate loans are usually sold to other institutions such as Fannie Mae or Freddie Mac and risk is transferred to investors in those institutions.

TCV: Why are many banks in such distress?

Mastorakis: Loans for land, construction and non-owner occupied commercial real estate are stressed areas right now. For many banks, their source of earnings has been negatively impacted. This has to be absorbed by the capital owners have in the organization. In contrast, Fremont Bank has vigorous and healthy growth in this economic environment driven by the residential lending business; not only new purchases, but refinancing existing mortgages.

TCV: How does Fremont Bank operate as a community bank?

Mastorakis: Our attention to individual needs is driven by the community. An example of this is that in the last 12 months I have been the primary speaker in 4-5 town hall style meetings in the community. We will go to specific branches and invite clients and members of the community to hear our economic views as they relate to local issues and listen to concerns.

Our banking decisions are made individually. This is different from a national bank that may use a less flexible perspective. We have a commitment to provide support through investing part of our profits in the community, supporting local nonprofit organizations and develop products to help them such as our B-Charitable Account. Our intent is to become the primary financial institution for our customers - business and personal - including investment and wealth management services.

TCV: What is the primary obstacle for business recovery at this time?

Mastorakis: It doesn't appear that access to capital is the major problem. When I ask small businesses what will help them, they say it is a demand side problem. They need someone to buy their goods or services. There is a reluctance to seek additional loans that need to be serviced. The banking industry has been criticized, and probably appropriately, for loose credit standards in the recent past which increased borrowing but now tighter credit is not the issue; businesses need customers.

TCV: How can local bank services help the economy?

Mastorakis: A family able to refinance their mortgage can improve their cash flow resulting in more economic activity and support of the local economy. This can help with the demand problem mentioned earlier and stimulate local business to grow. Not only does community banking help release cash for purchases through refinancing, we work on an individual basis with local business and property owners to navigate the challenges of this economy.

Another major problem facing us these days is unemployment. Fremont Bank has added over 100 positions in the last 12 months; a significant number for our business. We need these new employees to help during the current refinance cycle and in the future as we expand our business model with additional purchase loans, primary financial services and investment services. These jobs help stimulate our local economy.

TCV: What major changes do you see for banking?

Mastorakis: To serve current customers and attract new customers, person-to-person transaction "touch points" will always be a necessary part of our business. There is a decline in the number of people who depend upon this as the primary source of banking, but it will not disappear. It is a matter of choice.

Electronic banking serves as a choice and now, mobile banking - taking a picture of a check to deposit, using a phone device to check balances or making transfers is another. The method of transacting business will be a matter of what is preferred at the moment.

Traditional, face-to-face banking is no longer enough to maintain a relationship with customers. Customers want it all. I believe that those who prefer a community bank are looking for the personal touch and services but do not want to give up conveniences available elsewhere. We will retain personal relationships augmented by the latest technology.